I bought my rental in 2005 for 214K and sold it last year for 205K How can I have a gain if I sold my rental condominium for less than what I paid for it?

[Zbucklyo · Accepted solution]

You wouldn't have a capital gain, but would have to pay depreciation recapture tax on the amount of depreciation you have taken on the condo (or should have taken even if you didn't take it).  That is taxed as ordinary income, but with a cap of 25%.